What are the benefits of TAN?

Highlights

TAN is used for salary, interest or dividend deductions

TAN must be quoted in tax documents

TDS certificates are issued to tax payees

Learn about steps to possess a unique TAN

TAN is a Tax Deduction and Collection Account Number, which needs to be obtained by individuals or entities, who are mandated by the government to deduct or collect tax. Quoting your TAN in TDS or TCS return, payment, certificates, Annual Information Return and other documents is mandatory, else you may incur penalties.

The benefits of TAN are mentioned below:

Tax Deposits:

When you’re depositing tax, you must quote TAN in documents. TAN is used for deductions such as salary, interest, or dividends. When depositing tax, you must undertake these steps:
- Use Challan type 281 for deposit of tax deducted or collected at source.
- It is important to quote the correct 10-digit TAN, along with name and address of the deductor on each challan used for depositing tax. The TAN details can be verified from the official Income Tax website (www.incometaxindia.gov.in), before depositing TDS or TCS.
- For indicating separate sections and the correct nature of payment code in relevant columns, you can use separate challans.

Unique Identification

TAN is a unique identification number given to those who are deducting or collecting taxes at source, on behalf of the Income Tax Department, which makes every individual tax deductor or collector identifiable by his or her TAN.

Issuance of TDS Certificates

TDS Certificates must be issued by individuals or entities deducting or collecting tax at source. Issuance of these certificates are important so that a tax payee knows how much tax has been paid by him or her.
It helps the tax payee understand the amount of tax that has been paid and deposited with the Government. Quoting your TAN is important, so you can procure these certificates easily.
Generating Form 16 and Form 16A is simpler for TAN holders, through the NDSL Software.

Once issued, TAN is valid for lifetime, and it can be cancelled using the ‘TAN Correction Form’, if you have stopped collecting or deducting tax. It is important to have a unique TAN. In case you have multiple TANs, you must surrender the one that is not in use, and continue with a unique TAN, which you use regularly.